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Longview Power Wins Delay in Court Fight With Contractors
By Peg Brickley, Dow Jones News Service, October 9, 2013
Longview Power LLC Wednesday won a one-month delay in a showdown with contractors, after telling a bankruptcy judge there's hope of a settlement in long-running disputes. Judge Brendan Shannon said he would "reluctantly" push off until November 12th a court fight over cash between the troubled West Virginia plant operator and contractors that helped build the $2 billion facility.
The cash fight that has consumed weeks of attorney time, the judge warned, won't make or break Longview's chances of a turnaround. He urged the combatants to focus on the larger questions of how to revamp a $1.2 billion debt load in Chapter 11 while fixing the technical troubles that have plagued the facility.
"This case presents a need for both operational and financial restructuring in Chapter 11," Judge Shannon said at a hearing in the U.S. Bankruptcy Court in Wilmington, Del. "The case needs to move forward."
After years of battling over who's to blame for the plant's flaws, there is now "some movement toward a consensual resolution," Dentons's Philip R. White, an attorney for Longview, told Judge Shannon.
Mr. White argued for an adjournment to help talks play out, over the opposition of contractors, subsidiaries of Norwegian construction company Kvaerner ASA (KVAER.OS); Siemens Energy Inc., a unit of Siemens AG ( SI ); and German engineering firm Foster Wheeler AG ( FWLT ).
The contractors pushed instead for a fast hearing on who controls some $58 million worth of letters of credit.
Longview says it's entitled to access the money to keep going and warns it may be down to its last $1 million by the end of November. That estimate depends on the plant operating well, something that nobody can count on, giving the history of issues that have kept Longview operating at below-capacity levels.
Secured lenders are backing Longview in the fight with contractors and hoping to persuade the bankruptcy judge to take on the question of the letters of credit, rather than leaving the matter up to a panel of construction industry arbitrators.
Longview filed for Chapter 11 protection August 30th, with an arbitration involving the contractors in full swing. Contractors want the arbitration to continue, but secured lenders say that the non-court process excludes creditors.
Longview, which operates a 700-megawatt coal-powered plant in Maidsville, West Virginia, is the largest privately funded project in West Virginia history. It began operations in December 2011, providing power to the Pennsylvania, New Jersey and Maryland markets.